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Features
Ref. No. KLI/22-23/E-BB/492
ULIP gives access to both life insurance & investment. These plans allow you to enjoy a life cover and the opportunity to earn market-linked returns. Read to know how to stay insured while investing.
Investments serve two purposes to help us achieve our goals - they help us save money for our needs and also give us a way to increase the value of our savings. Insurance Policies add a third dimension to our investments – security!
Unit-linked Term insurance plans (ULIPs) give you access to both –insurance and investment. These plans allow you to enjoy a life cover and the opportunity to earn market-linked returns.
A part of the premium you pay goes towards providing the insurance cover, while the balance, after deducting the distribution and management charges, gets invested as per your choice.
The investment proportion of your premium gets invested into different fund options managed by professional fund managers. These fund options, in turn, invest the premium amount in varying proportions of various financial instruments like equities, debt and money market instruments.All these investment options carry different levels of risk and return potential. Generally higher the risk, higher would be the return potential. While equities involve the highest investment risk, they also tend to give higher returns over the long run.
You can decide how much amount you wish to allocate in the fund of your choice and also enjoy the freedom to switch between the fund options any time.
With ULIPs, you can benefit from:
ULIPs give you a range of investment options. You can choose to invest your money into pure equity or debt funds or a combination of both, based on your preference and risk profile.
ULIPs encourage investments in a disciplined manner. Investing regularly in small doses over a period of time lets you gain from the benefit of rupee cost averaging, which evens out the highs and lows of a fluctuating market.
Investor B invests the same amount of Rs 90,000 through periodic investments of Rs 15,000 every month over a period of six months and purchases the same equity share at different rates. At the end of the six-month period, while both the investors had invested the same amount, Investor B has been able to purchase more units.
In this way, rupee cost averaging could help you lower the average purchase costs and make the most of price fluctuations depending upon the prevailing market conditions.
ULIPs let you choose the life cover and the desired premium amount, in most cases. You can also switch between various fund options with ease.
You know how and where your money is invested and can even track your portfolio performance. You are kept informed of all the applicable charges as well as your net investment amount.
In 2013, the Insurance Regulatory and Development Authority of India (IRDAI) introduced sweeping changes in the ULIP structure adding more value to it, resulting in improved benefits for the investor:
ULIPs come with a low charge structure, which implies that a greater portion of the premium is invested to give you fruitful returns.
Your lifetime savings will now get enhanced protection from market fluctuations, as pension ULIPs will now ensure a minimum guaranteed return on maturity.
All ULIPs other than pension and annuity products will now provide a minimum life cover or health cover, higher than what is being offered presently. For pension and annuity ULIPs, life/health cover will be provided as riders. Thus, you can now enjoy higher cover to tide over life’s uncertainties.
Enjoy a longer investment period: The new ULIPs have a lock-in period of 5 years. Besides, all ULIPs (excluding single premium ULIPs) will now have a premium paying term of at least 5 years. This way you will stay invested for a longer time frame. Investing small amounts at regular intervals over a longer period would help you build a bigger corpus.
Even distribution of charges: Charges on ULIPS are evenly distributed during the lock-in period and you would be paying equal amounts throughout the lock-in period.
Anytime after completion of 5 years of the policy, if you are faced with an emergency, you can choose to surrender your policy without any additional costs or charges.
Thanks to these reforms, Unit Linked Insurance Plans have emerged as a vital long-term protection and savings vehicle, with enhanced customer value.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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